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Goncalves recalls 32-year steel career

Keywords: Tags  Lourenco Goncalves, Metals USA, CSN, CSI, Apollo Global Management, Reliance Steel & Aluminum, steel industry, capacity consumption


CHICAGO — Lourenco Goncalves’ retirement from the steel sector brings to an end a career that spanned more than three decades and multiple continents, and witnessed numerous changes in an evolving metals industry.

Goncalves, who exited his post as chairman, president and chief executive officer of Metals USA Holdings Corp. after its April 12 purchase by Reliance Steel & Aluminum Co., worked in the steel sector for 32 years, including 15 years as a chief executive, and is satisfied with what he achieved over the course his career, he told AMM in an interview.

Goncalves’ career began in Brazil when he joined Cia Siderurgica Nacional (CSN) right out of college in 1981, starting in the basic oxygen furnace shop and gradually moving downstream through continuous casting, hot rolling, cold rolling and coating. He was then given an additional role managing sales as well as production, a promotion he attributed to his characteristic outspokenness. "I was critical of the way my company sold steel," he said. "I got the job because I kept complaining."

Then Vale SA’s chief executive officer, who also ran CSN, asked him to run California Steel Industries Inc. (CSI), he said. It was supposed to be a one-year assignment, after which he was to return to Brazil, but he came to love the United States and didn’t return to his homeland.

"Two years became four and four promised to become eight. CSI was profitable," he said. But in the fifth year, bankers representing shareholders of newly restructured Metals USA came to Goncalves with a proposal. He accepted.

After Metals USA exited bankruptcy in 2002, Goncalves listed it first on the American Stock Exchange and then Nasdaq, and inside of two years its share price went from $3 to $20 apiece, he said.

Given the cyclicality of the business, he said, the only way to lock in those gains was to take the company private, so at that point he brought in Apollo Global Management LLC, which bought the service center chain for $22 per share in 2005. Shareholders were paid several dividends over the next five years and the company went public again in April 2010. "Now we sold it to Reliance," he said.

Los Angeles-based Reliance completed its previously announced purchase of Metals USA for $1.24 billion, comprising $20.65 per share ($786 million) in cash for shareholders and the assumption of $454 million in debt (amm.com, April 15).

Goncalves said his biggest accomplishment with Metals USA was to develop real teamwork among branches that once were small, independent distributors before being rolled up into a conglomerate in the late 1990s.

"We do not dissipate energy with infighting. In the first year, I replaced the entire top management. We identified great talent within and promoted managers. We became a single entity. Our ability to cooperate is second to none," Goncalves said. Metals USA succeeded because "our one-plus-one made much more than two."

Looking forward, the steel industry’s challenge through the next decade is to identify burgeoning demand and match that with the correct amount of capacity, he said. "There is always something that motivates the market. But now, China is maturing. Business is shrinking in Europe and in the United States," and developing countries cannot offset lower global consumption.

"I think the only place for another growth spurt is Africa. People don’t realize it exists. But we need that," Goncalves said. "People talk about global overcapacity, but what we have is under-consumption. The steel industry is based on volume. No volume equals problems. We need to keep consumption growing."


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